Chapter 2 National Differences in Political Economy PPT

Intellectual Property Rights

- Patents - Copyrights - Trademarks

Tribal totalitarianism

- a political party that represents the interests of a particular tribe monopolizes power

Collectivism

- a system that stresses the primacy of collective goals over individual goals (Plato & Socialism) - the needs of the society as a whole are generally viewed as being more important than individual freedoms

Socialism (Karl Marx)

- advocated STATE OWNERSHIP of the basic means of production, distribution, and exchange - the state then manages the enterprises for the BENEFIT OF SOCIETY AS A WHOLE - split into communists and social democrats - many state-owned enterprises failed to succeed, and today, many nations are implementing privatization programs

Communist Totalitarianism

- advocates achieving socialism through totalitarian dictatorship

Paris Convention for the Protection of Industrial Property

- agreement signed by 170 countries to protect intellectual property rights

Civil Law

- based on a very detailed set of laws organized into codes - found in over 80 countries, including Germany, France, Japan, and Russia

Theocratic Law

- based on religious teachings - Islamic law is the most widely practiced

Common Law

- based on tradition, precedent, and custom - found in most of Great Britain's former colonies including the US

Communists

- collectivism could only be achieved through revolution and totalitarian dictatorship

Trademarks

- designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products

United Nations Convention in Contracts for the International Sales of Goods (CIGS)

- establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations - countries that adopt CIGS signal to other nations that they will treat the Convention's rules as part of their law

Copyrights

- exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and dispose of their work as they see fit

Totalitarianism

- form of government in which one person or political party exercises absolute control over all spheres of human life, and opposing political parties are prohibited 1. there is widespread political repression 2. there are no free and fair elections 3. media is censored 4. basic civil liberties are denied 5. challenges to the regime are prohibited

Patents

- give the inventor exclusive rights to the manufacture, use, or sale of that invention

Mixed Economy

- includes some elements of a market economy and some elements of a command economy - governments tend to take over troubled firms that are considered to be vital to national interests - the number of mixed economies in the world today is falling

Right wing totalitarianism

- individual economic freedom is allowed, but individual political freedom is restricted in the belief that it could lead to communism

Product Liability

- involves holding a firm and its officers responsible when a product causes injury, death, or damage - liability laws are usually least extensive in less developed countries

Corruption

- is present in all countries to some degree, however, when a country has a high level of corruption: 1. foreign direct investment falls 2. international trade falls 3. economic growth fails

The Foreign Corrupt Practices Act (FCPA)

- limits corruption in the US - it is illegal to bribe a foreign government official in order to obtain or maintain business over which the foreign official has authority - all publicly traded companies must keep detailed records so that it is clear whether a violation of the act has occurred - facilitating or expediting payments to secure the performance of routine government actions are permitted

Economic Systems

- political ideology and economic systems are connected 1. Market economy 2. Command economy 3. Mixed economy - a free market system is likely in countries where individual goals are given primacy over collective goals - State-owned enterprises and restricted markets are common in countries where collective goals are dominant

Theocratic totalitarianism

- political power is monopolized by a party, group, or individual that governs according to religious principles

Democracy

- political system in which government is by the people, exercised either directly or through elected representatives - most common form today is representative democracy - elected representatives vote on behalf of constituents

Intellectual Property

- property that is the product of intellectual activity

Public Action (violate property rights)

- public officials extort income or resources from property holders through... - excessive taxation, requiring expensive licenses or permits, or taking assets into state ownership without compensation

Legal System

- refers to the rules, or laws, that regulate behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained 1. regulate business practice 2. define the manner in which business transactions are to be executed 3. set down the rights and obligations of those involved in business transactions

Trade Related Aspects of Intellectual Property Rights (TRIPS)

- requires WTO members to grant and enforce patents lasting at least 2 years and copyrights lasting 50 years

Product safety laws

- set certain safety standards to which a product must adhere - firms must decide whether to adhere to the standards of the home country or the standards of the host country

Individualism

- suggests individuals should have freedom over their economic and political pursuits (Aristotle) 1. individual freedom and self-expression 2. letting people pursue their own self-interests to achieve the best overall good for society 3. democratic systems and free markets

Command Economy

- the goods and services that a company produces, the quantity in which they are produced, and the price at which they are sold are all planned by the government - all businesses are state-owned, and so have little incentive to control costs and be efficient - because there is no private ownership, there is little incentive to better serve consumer needs

Market Economy

- the goods and services that a country produces and the quantity in which they are produced is determined by SUPPLY & DEMAND - consumers, through their purchases, determine what is produced and in what quantity - the role of government is to encourage free and fair competition between private producers

Property Rights

- the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource

What are the implications of the political economy for international business?

- the political, economic, and legal systems of a country raise important ethical issues that have implications for the practice of international business - the political, economic, and legal environment of a country clearly influences the attractiveness of that country as a market and/or investment site

Protection of Intellectual Property

- the protection of intellectual property rights differs greatly from country to country

Political System

- the system of government in a nation - Political systems can be assessed in terms of the degree to which they are... 1. Democratic or totalitarian 2. Emphasize collectivism or individualism

How do common law and civil law differ?

- the two systems approach contract law in different ways 1. In a common law state, contracts are very detailed with all contingencies spelled out 2. In a civil law state, contracts are shorter and much less specific

Private Action (violate property rights)

- theft, piracy, blackmail, and the like by private individuals or groups

Social Democrats

- worked to achieve the same goals (as communists) by democratic means

Political Economy

1. Political system 2. Economic system 3. Legal system - these systems are INTERDEPENDENT and interact and influence each other - a country's political system has major implications for the practice of international business